Now the Trade News is Negative…. Shocker

According to U.S. Secretary of Commerce, Wilber Ross, the U.S. and China are apparently “miles and miles away” from reaching a trade agreement. This counters President Trump’s recent comments that the two economic powerhouses are “very, very close” to a trade solution. Stock investors are using this as a reason not to continue the climb higher that stocks have made in recent weeks. With stocks just under a critical ceiling of resistance, the timing of this seems to be more of a technical reason for not advancing even higher. With stocks taking a breather, this is providing a bit of relief in the mortgage bond market, helping to soften the trend of mortgage interest rate pricing slowly ticking higher.

As the United States enters the 33^rd day of a federal government shutdown, the economic exposure levels are elevating every day. Some government economists are now saying it is possible the shutdown could drop GDP numbers for the 1^st quarter of 2019 down to 0% growth. With the first quarter of every year historically being the lowest for GDP growth, combining this with 800,000 federal employees and an unknown number of private contractors not receiving a paycheck, this is certain to have a great impact on the U.S. economy. Of course, once the federal shutdown comes to an end, we will see a spike in consumer purchases as full back pay is rewarded to the 800,000 federal employees. However, the economy will not escape this mess without at least a bruise.

Mortgage bonds are back to trading within the sideways channel that has held rates steady for a couple of weeks. If this channel holds, we can float.  Just be ready to lock should sentiment reverse.